4Q FY2017 Results Presentation 5 February 2018 IR Adviser
4QFY17 OPERATIONS REVIEW
Group 4QFY17 revenue significantly higher on stronger domestic and export sales as well as new contribution from the Myanmar plant … 4QFY17 domestic sales rose 12.2% due to stronger demand from F&B customers Quarterly Domestic Revenue (RM ‘mil) Domestic Domestic 46.4% RM47.0m 44.5% 47 +12.2% yoy 46 46 43 43 43 42 42 40 40 38 38 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 4QFY16 4QFY17 RM90.4m RM105.7m Quarterly Export Revenue (RM ‘mil) 8.5 6.5 Exports Exports 55.5% RM58.6m 53.6% +21.0% yoy 57 51 51 49 50 48 48 48 47 47 45 41 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 4QFY17 total exports leaped 21.0% yoy on new contributions of RM8.5 mil from the Myanmar plant Myanmar plant Exports (excl. Myanmar plant) 4QFY17 CORE REVENUE (YOY CHANGE) 3
Daibochi Myanmar 4QFY17 revenue significantly higher on commencement of first export sales … 5-year income tax waiver commenced in November 2017 Approval to export outside Myanmar 4QFY17 revenue from the Myanmar plant rose 31.3% qoq on first export sales in December 2017, and increased demand within Myanmar Received approval from the Myanmar Investment Commission (MIC) on 8 December 2017 to export Quarterly Revenue Quarterly PBT & PBT Margin goods outside of Myanmar Myanmar Plant (RM ‘mil) Myanmar Plant (RM ‘mil) Delivered seven containers of flexible packaging to eight cost-sensitive customers in Malaysia in December 2017 +31.3% 28.6% 19.3% 8.5 Commenced 5-year income tax waiver -11.5% 6.5 1.8 1.6 Received notification from MIC on the commencement of 5-year income tax waiver from 22 November 2017 3Q17 4Q17 3Q17 4Q17 PBT PBT Margin 4QFY17 PBT dipped 11.5% qoq due to higher key raw materials cost and increased operating costs to expedite delivery of new export orders; margins also saw compression from increased sales to cost-sensitive customers DAIBOCHI MYANMAR UPDATE 4
GROWTH STRATEGIES
Malaysia plant to maintain strong growth momentum through new export contracts … Daibochi Myanmar targets to enter into qualification with MNCs MALAYSIA PLANT MYANMAR PLANT Eyeing exports to regional markets Targeting new business from Myanmar and South East Asia (SEA) Secured a contract with a MNC customer in 1QFY18 to supply flexible packaging to the Australia Targets to enter into qualification with MNCs to and New Zealand region for its FMCG brand serve their expanding packaging requirements in the high-growth SEA region Delivery expected to commence in 2QFY18 To leverage low-cost and geographical advantage to Working towards commencement of flexible secure export contracts from cost-sensitive packaging supply to another two MNCs for their customers in the SEA region F&B and FMCG brands in Indonesia Aiming to reach RM100 mil revenue in FY19 CAPEX Investing RM10.5 mil in FY18 for new machinery CAPEX comprising: Planned CAPEX of USD1.7 mil in FY18 comprising: Printing machine, high-speed slitter, and Printing machine, extrusion machine, slitting supporting machinery and rewinding machine GROWTH STRATEGIES 6
4QFY17 FINANCIAL REVIEW
Group revenue and profitability continued quarter-on-quarter expansion … targeting to deliver strong growth in FY18 4Q17 to 3Q17 to FY17 to FY16 to 31.12.17 30.09.17 % chg qoq 31.12.17 31.12.16 % chg yoy RM'mil FY17 Review (yoy comparison) Revenue 105.66 102.03 3.6% 388.65 371.16 4.7% Revenue increased on new contributions from Daibochi Myanmar since 3Q17 EBITDA 14.81 14.67 0.9% 51.38 45.27 13.5% Operating Profit 11.29 11.19 0.9% 37.60 32.61 15.3% PBT rose on new contributions from Daibochi Myanmar as well as better sales mix, and progress 0.78 0.06 1218.6% 1.16 0.09 1183.3% Share of Associate Results in efforts to reduce wastage and improve operating 11.17 10.48 6.6% 35.74 29.95 19.3% efficiency at the Malaysia plant Profit Before Tax Net Profit to Shareholders 7.93 7.22 9.9% 25.96 24.52 5.9% Net profit rose in line with higher PBT; partially offset by higher effective tax rate on lower reinvestment Basic EPS (sen)* 2.42 2.20 10.0% 7.92 7.49 5.7% allowances EBITDA margin 14.0% 14.4% (0.4 pt) 13.2% 12.2% 1.0 pt EBITDA margins expanded due to similar factors PBT margin 10.6% 10.3% 0.3 pt 9.2% 8.1% 1.1 pt that drove PBT higher Net margin 7.5% 7.1% 0.4 pt 6.7% 6.6% 0.1 pt *Adjusted to reflect the bonus issue of 2 for every 10 ordinary shares held by the entitled shareholders, completed on June 28, 2017 Quarterly Revenue Quarterly PBT Quarterly PATMI (RM ‘m) (RM ‘m) (RM ‘m) 10 100 20 5 50 10 0 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 INCOME STATEMENT 8
Net gearing significantly reduced from 3QFY17 level … continues to sustain double-digit returns As at 31.12.2017 As at 31.12.2016 Remarks (Unaudited) (Audited) Fixed Assets (excl associate investment & deferred tax) 173.31 141.22 Due to recognition of RM35.1 million in intangible assets* Associate Investment 19.36 20.25 Current Assets 173.33 146.81 Due to increase in inventories, and trade and other receivables Current Liabilities 110.42 92.44 Due to increase in borrowings, and trade and other payables Shareholders’ Equity 200.88 189.17 Due to issue of bonus shares and warrants Due to Daibochi Myanmar acquisition and increased working Total Borrowings 69.87 53.99 capital requirements Cash & Bank Balances 18.31 15.83 Due to higher operating cash flow Net Gearing 0.26 x 0.20 x Net gearing significantly lower than 0.38x in 3QFY17 Return on Average Shareholders’ Equity** 13.3% 13.2% Return on Average Total Assets** 7.7% 8.1% * The Group carried RM35.1 mil in intangible assets associated with the acquisition of its 60% interest in Daibochi Myanmar **Based on net profit for the trailing twelve months BALANCE SHEET 9
Fourth interim single-tier dividend of 1.3 sen per share payable on 21 March 2018 (ex-date on 27 February 2018) … RM’m Payment History Dividend Payout 62% 62% Dividend per share Dividend Payout 60% 60% (sen) (RM 'm) FY2016 FY2017 FY2016 FY2017 16.0 1 st Interim (single tier) 14.9 14.8 14.8 1.21* 1.10* 3.95 3.61 2 nd Interim (single tier) 1.11* 1.00 3.62 3.28 FY14 FY15 FY16 FY17 3 rd interim (single tier) 1.10* 1.15 3.59 3.76 4 th interim (single tier) 1.10* 1.30 3.60 4.30 Total Dividend Payout Ratio^ Total 4.52 4.55 14.76 14.94 ^Excludes net profit contribution from Daibochi Myanmar *Adjusted to reflect the bonus issue of 2 for every 10 ordinary shares held by Dividend Per Share* sen the entitled shareholders, which was completed on June 28, 2017 Dividend policy revised to pay out at least 60% of net profit attributable to shareholders, excluding 4.52 4.90 4.52 4.55 net profit contributions from Daibochi Myanmar FY14 FY15 FY16 FY17 DIVIDENDS 10
INVESTMENT MERITS
Led by innovation and efficiency … a market leader in supplying top quality consumer flexible packaging to MNCs in the region Price Market Cap KEY MERITS RM2.24 RM733m MNCs make up almost 80% of total revenue P/E (ttm) P/B (benefitting from steady and large orders, strong creditworthiness) Exports to SEA & ANZ exceed 50% of revenue 28.2x 4.4x Supplier to renowned F&B and FMCG brands (supporting highly-resilient sectors) Contribution from Myanmar to see earnings boost EV/EBITDA (ttm) FY17 Div. Yield Industry-leading R&D and product innovation 15.3x 2.0% Highly-experienced management team VALUATIONS AND MERITS (as at 26 January 2018) 12
Contact Information Investor Relations Low Jin Wei, Executive Director Daibochi Plastic and Packaging Industry Berhad +606-231 9779 jinwei@daibochi.com Julia Pong, Manager Aquilas Advisory (M) Sdn Bhd +6012-390 9258 julia@aquilas.com.my
APPENDIX
CORPORATE PROFILE
Leading consumer flexible packaging player in Malaysia and South East Asia with 45-year track record … serving leading MNC brands in the F&B and FMCG sectors Daibochi established since 1972 A leading provider of consumer flexible packaging to major international brands in the F&B and FMCG industries Focused on quality and innovation Experienced R&D team supported by well-equipped laboratory testing facilities Increasing exports prowess Growing exports across South East Asia, Australia and New Zealand markets; exports make up >50% of group revenue OVERVIEW 16
Internationally-certified production facilities that comply with all factory audits by MNC clientele … strength in innovation Daibochi’s Malaysia plant certifications Attained ISO:9001 and ISO:14001 certifications Hazard Analysis Critical Control Points (HACCP) compliant to ensure adherence to food safety requirements Obtained Food Safety System Certification (FSSC:22000) Daibochi’s Myanmar plant certifications Secured the ISO 9001:2015 accreditation and the HACCP FSMS certification in October 2017 PRODUCTION FACILITIES 17
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